Monthly Product Performance Report

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What Is The Monthly Product Performance Report?

Shows the performance of the bank’s microfinance product, particularly the size, quality, and profitability of its microfinance operations.

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Importance of The Monthly Product Performance Report

Enables management to regularly monitor the performance of the microfinance product and the accomplishments of the microfinance unit.

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Format of the Report

Consists of two parts: the product performance data and the statement of income and expenses. 

Allows banks to either report only the direct or incremental expenses of their microfinance product, or include the indirect expenses.  Compares the performance of the product during the current month and the previous month.

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Sources of Information

Product performance data are sourced from the MIS reports.

Data for the statement of income and expenses are sourced from the bank’s financial statements.

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Who Prepares the Report?

The Microfinance Supervisor or the branch bookkeeper.

The report should be completed as soon as the branch monthly financial statements have been prepared.  Should be reviewed by the branch bookkeeper or accountant and by the branch manager before its submission to head office.

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Who Gets the Report?

• The bank president or general manager

• RBAP-MABS  One copy each of the Portfolio At Risk report and

the AO Performance Report should always be attached to the report.

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Format of the Report

Product Performance Data

• Shows the size and quality of the bank’s microfinance

operation

Statement of Income and Expense

• Shows whether the bank is making money from its

microfinance operation

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Current Month Previous Month# of Active Borrowers Outstanding 128 77 # of New Borrowers 26 34 # of Repeat Loans 8 - Loan Portfolio Balance 1,399,105 861,163 # of Deposit Accts up to P15,000 Outstanding 22,844 22,599 Deposit Balance for Accts up to P15,000 24,756,446 24,785,014 # of Microfinance Field Staff 4 4 # Loans Disbursed during the Month 34 34 Cumulative # Loans Disbursed 111 77 Amt. of Loans Disbursed during the Month 1,195,000 603,000 Cumulative Amt. of Loans Disbursed 2,370,000 1,175,000 Amount Past Due - 1,223 # of Accounts with an Amount Past Due - 1 Portfolio at Risk 1 day or more - 9,230

PRODUCT PERFORMANCE DATA

BANGKO PINOYMonthly Product Performance Report

For the Month Ending 30 September 2002

Sample Report

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STATEMENT OF INCOME AND EXPENSES Current Month Previous Month Financial Income

Interest Income on Loans 38,643 13,054 Service Charge on Loans 23,900 12,060 Penalty Fee on Loans 0 -

Total Financial Income 62,543 25,114 Total Financial Expense 10,360 6,170 Gross Financial Margin (spread) 52,183 18,944 Loan Loss Provision

Total reserve requirement, current month 27,982 17,500 Less: Total, reserves, as of previous month 17,500 9,702 Loan loss provision, This Month 10,482 7,798

Net Financial Margin 41,701 11,145 Direct Operating Expenses

Microfinance staff salaries & benefits 28,875 28,875 Gross Receipts Tax 3,127 1,256 Depreciation-MFU equipment 0 - Transportation expenses 700 500 Supplies 700 400 Communications 200 200 Training & Professional Fees 5,500 5,500 Other direct expenses 600 600

Total Direct Expenses 39,702 37,741 Other Income 0 - Net Income Before Indirect Expenses 1,999 (26,595) Indirect Operating Expenses

Salaries & Benefits - Other Bank Staff 4,125 4,125 Management & Other Professional Fees 1,125 - Banking Fees - - Taxes & Licenses 375 - Insurance 150 - Depreciation of Other Bank Assets 461 461 Other Indirect Operating Expenses 1,688 1,563 Total Indirect Expenses 7,924 6,149

Net Income/(Loss) Before Tax (5,925) (32,744) Cumulative Income/(Loss) Before Tax (38,669) (55,221)

Sample Report

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Product Performance Data

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Client Outreach

Performance Data Current Month Previous Month -Number of Active Borrowers

-Number of New Borrowers -Number of Repeat Loans -Loan Portfolio Balance

Number of Active Borrowers - total number of clients with outstanding loans as of the reporting date. Information can be derived from the MIS reports.

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Number of New Borrowers - total number of clients borrowing for the first time from the bank during the month. Includes regular loan clients of the bank that have, for whatever reason, shifted to borrowing under its microfinance loan facility. Information can be derived from the MIS reports (i.e. AO Performance Report).

Number of Repeat Loans - total number of repeat loans granted to existing microfinance borrowers. Information can be derived from the MIS reports (i.e. AO Performance Report).

Loan Portfolio Balance - the total balances of all outstanding microfinance loans as of the reporting date. Only includes the principal amount of the loan. Information can be derived from the MIS reports.

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Micro-Deposits

Performance Data Current Month Previous Month

-Number of Deposit Accounts (P15,000 & below)

-Amount of Deposit Accounts (P15,000 & below)

Number of Deposit Accounts (P15,000 & Below) - total number of all deposit accounts (including those of non-microfinance clients) with outstanding deposit balances of up to P15,000, as of the reporting date. Includes all types of deposit accounts (i.e., savings, time, & current accounts). Data can be obtained from the monthly report submitted by the bank to PDIC.

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Amount of Deposit Accounts (P15,000 & Below) - total amount of all deposit accounts with balances up to P15,000. Data can be obtained from the monthly report submitted by the bank to PDIC. The benchmark, against which the growth in the number and balance of micro deposit accounts may be compared with, is the month before the start of the bank’s microfinance lending operation.

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Size of the Microfinance Unit

Performance Data Current Month Previous Month

-Number of Microfinance field staff

Number of Microfinance field staff - total number of Account Officers working full-time in the microfinance unit. Excludes MFU staff, if any, that are not directly involved in generation and supervision of microfinance loan accounts, such as the MFU Supervisors and loan bookkeepers or clerks.

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Loan Disbursements

Performance Data Current Month Previous Month

-Number of Loans Disbursed During the Month

-Cumulative Number of Borrowers -Amount of Loans Disbursed During the Month -Cumulative Amount of Loans Disbursed

Number of Loans Disbursed During the Month - Total number of loans disbursed during the month. The data can be obtained from the MIS report (i.e. AO Performance Report). The total number of loans disbursed should be equal to the sum of the Number of New Borrowers and Number of Repeat Loans.

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Cumulative Number of Borrowers - Total number of loans disbursed since the start of the microfinance lending operation. Equal to the sum of the number of new borrowers in the previous month and that of the current month.   Amount of Loans Disbursed During the Month - Total amount of loans disbursed during the month. The data can be obtained from the MIS report (i.e. AO Performance Report).

Cumulative Amount of Loans Disbursed - Total amount of loans disbursed since the start of the microfinance lending operation. Equal to the sum of the amount of loans disbursed in the previous month and that of the current month.

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Loan Portfolio Quality

Performance Data Current Month Previous Month

-Loan Amount Overdue

-Number of Accounts With Loan Amount Overdue -Portfolio At Risk 1 Day or More -Portfolio At Risk More than 7 Days -Portfolio At Risk More than 30 Days -Portfolio At Risk 1 Day or More (%) -Portfolio At Risk More than 7 Days (%) -Portfolio At Risk More than 30 Days (%)

Loan Amount Overdue - Total amount of past due installments (principal amount only). Data can be obtained from the MIS report (i.e. Portfolio At Risk Report).

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Number of Accounts with an Overdue Amount - Number of loans with at least one past due installment. Data can be obtained from the MIS report (i.e. Portfolio At Risk Report).

Portfolio At Risk 1 Day or More - Total balance of all loans with at least one past due installment. Data can be obtained from the MIS report (i.e. Portfolio At Risk Report).

Portfolio At Risk More than 7 Days - Total balance of loans with installments that are past due for more than 7 days. Data can be obtained from the MIS report (i.e. Portfolio At Risk Report).

Portfolio At Risk More than 30 days - Total balance of loans with installments that are past due for more than 30 days. Data can be obtained from the MIS report (i.e. Portfolio At Risk Report).

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PAR Ratio, 1 Day or More - (Portfolio At Risk 1 Day or More)/(Loan Portfolio Balance) x 100

PAR Ratio, More than 7 Days - (Portfolio At Risk More Than 7 Days)/(Loan Portfolio Balance) x 100

PAR Ratio, More than 30 Days - (Portfolio At Risk More Than 30 Days)/(Loan Portfolio Balance) x 100

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Statement of

Income and Expense

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Financial Income

Statement of Income and Expenses Current Month Previous Month Financial Income

-Interest Income on Loans -Service Charge -Penalty Fee on Loans Total Financial Income

Interest Income on Loans - Total interest income earned for the month. Data can be obtained from the MIS report (i.e. AO Performance Report).

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Service Charge - Total service charges earned for the month. Data can be obtained from the branch bookkeeper or accountant. If the service charge is deducted from the loan proceeds (as it usually is), the amount should be equal to the rate (%) times the total amount of loans disbursed during the month.

Penalty Fee on Loans - Total penalty fees collected on late installment payments during the month. Data can be obtained from the branch bookkeeper or accountant.

Total Financial Income - Sum of Interest Income, Service Fee, and Penalty Fee.

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Total Financial Expenses

Interest Expense on Deposits - Interest expense on deposits incurred for the month.

Interest Expenses on Borrowed Funds - Interest expenses on borrowings for the month.

Total Financial Expenses - Sum of the Interest Expense on Deposits and Interest Expense on Borrowed Funds

Statement of Income and Expenses Current Month Previous Month

Financial Expense -Interest Expense on Deposits -Interest Expense on Borrowed Funds Total Financial Expenses

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Gross Financial Margin

Statement of Income and Expenses Current Month Previous Month

Total Financial Income Financial Expense -Interest Expense on Deposits -Interest Expense on Borrowed Funds Total Financial Expenses Gross Financial Margin

Gross Financial Margin - the difference of Total Financial Income and Total Financial Expenses. Also called spread, which is the difference of the loan interest rate and the cost of funds expressed as percentage (%) of the loan portfolio.

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Loan Loss Provision

Statement of Income and Expenses Current Month Previous Month

Loan-Loss Provision -Required Loan-loss reserve, current month -Less: Available reserve, previous month Loan-Loss Provision, Current Month

Loan-Loss Provision - is the amount allocated for increasing the loan-loss reserve to an adequate level. Loan-Loss Reserve is the amount used for covering up losses when writing-off bad loans.

 The amount to be allocated for loan-loss provision is based on the aging of portfolio at risk as shown in the MIS report (Portfolio At Risk Report).

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Required Loan-Loss Reserve, Current Month is the amount that should be provided to cover for losses if bad loans are written off.

Available Reserve, Previous Month can be found in the previous month’s bank performance report. Remember that loans written off in the previous month reduce loan loss reserves by the amount written off during the month.

Loan-Loss Provision, Current Month is the amount needed to increase the loan-loss reserve to the required level. The loan-loss reserve should only be increased if the available reserve is not enough – that is, if it is smaller than the required loan-loss reserve.

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Net Financial Margin

Statement of Income and Expenses Current Month Previous Month

Gross Financial Margin Loan-Loss Provision -Required Loan-loss reserve, current month -Less: Available reserve, previous month Loan-Loss Provision, Current Month Net Financial Margin

Net Financial Margin - the difference of Gross Financial Margin and Loan-Loss Provision, Current Month

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Direct Operating Costs

Direct Operating Expenses , also called incremental expenses, are those expenses that can be directly attributable to the microfinance product. These are expenses that the bank will not have incurred without its microfinance operation.

Statement of Income and Expenses Current Month Previous Month

Direct Operating Expenses -Microfinance staff salaries & benefits -Depreciation – MFU Equipment -Transportation expense -Supplies -Communication -Training & Professional fees -Other direct expenses Total Direct Expenses

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Microfinance staff salaries and benefits - the basic salary and allowances received by full-time microfinance staff. Those of other staff working part-time in the microfinance unit (e.g part-time microfinance supervisor) are excluded here.

Depreciation-MFU Equipment - the depreciation expense for equipment used exclusively by the microfinance unit. The depreciation period and method should be based on the accounting policy of the bank.

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Transportation expense - expenses incurred by the microfinance staff for motorcycle gas and oil, or for transportation fares in public utility vehicles. Includes expenses for lodging and meals while on travel, in cases where these are provided

Supplies - expenses for stationeries, loan forms and

documents, and other office supplies used by the

microfinance unit

Communications - expenses incurred for phone calls,

fax and mails

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Training & Professional Fees - expenses for training and technical assistance provided to the microfinance unit by training organizations and other microfinance service providers such as the RBAP-MABS

Other Direct Expenses - other expenses incurred by the microfinance unit such as representation expenses, write-off of bad debts, membership fees in microfinance networks, and expenses incurred in meetings and special events.

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Computing for the Depreciation Expense

The depreciation expense for equipment exclusively used by the microfinance unit may be estimated as shown in the following table. The depreciation period or economic life should be based on the bank’s accounting policies.

Item

No. of Units

(A)

Cost Per Unit

(B)

Total Cost

(C = A x B)

Economic Life

(No. of Months) (D)

Monthly Depreciation Expense

(C/D)

Motorcycle 2 70,000 140,000 60 2,333.33 Computer 1 25,000 25,000 36 694.44 Printer 1 15,000 15,000 36 416.67 Typewriter 1 12,000 12,000 60 200.00 Calculators 4 500 2,000 36 55.56 Office furniture 4 2,000 8,000 60 133.33 Steel Cabinet 1 1,500 1,500 60 25.00

Total 203,500 3,858.33

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Other IncomeStatement of Income and Expenses Current Month Previous Month

Net Financial Margin Direct Operating Expenses -Microfinance staff salaries & benefits -Gross Receipts Tax -Depreciation – MFU Equipment -Transportation expense -Supplies -Communication -Training & Professional fees -Other direct expenses Total Direct Expenses Other Income

Other Income refers to income generated by the microfinance unit outside of their regular lending activities. An example of this may include fees for training or exposure visits hosted by the bank.

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Net Income Before Indirect Expenses Statement of Income and Expenses Current Month Previous Month

Net Financial Margin Direct Operating Expenses -Microfinance staff salaries & benefits -Gross Receipts Tax -Depreciation – MFU Equipment -Transportation expense -Supplies -Communication -Training & Professional fees -Other direct expenses Total Direct Expenses Other Income Net Income Before Indirect Expenses

Net Income Before Indirect Expenses is computed as follows: Net Financial Margin less Total Direct Expenses plus Other Income.

 This item shows whether the product is generating enough revenue to cover the direct or incremental expenses incurred by the bank.